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Definition edit

High performance work systems (HPWS), sometimes known as high involvement or high commitment organization managerial systems, is a combined system of human resource practices that designs to improve employees' skills, commitment, productivity and flexibility in such a way that employees become a source of organisation’s competitive advantage.[1][2][3]

High performance work systems (HPWS) have come into being for years as an auxiliary to help the research on Human resource management (HRM). HPWS are focused on a series of HR practise, such as elective staffing, self-managed teams, decentralized decision making, extensive training, flexible job assignment, open communication and performance-contingent compensation[4] in order to make employees to be committed, involved and empowered in the organisation.[5] In the high involvement organisations, those staff are more responsible to the company and they are eager to learn more, know more and sacrifice more to achieve personal success.[6] Therefore, the purpose of HPWS is to help the organisation to achieve the goals as well as the effectiveness and provide the staff with high job satisfaction.[7][8] So HPWS have a significant impact on the organisational performance.[9] Besides the productivity, turnover and the firm’s financial performance will also be favorably affected by HPWS.[10][11] HPWS are certainly beneficial to the organisation, however some debates still remain on the dark side towards employees’ behaviour.[12]

History edit

In order to name the technical, social and managerial aspects during the work which can be highly efficient, HPWS began as a concept in United States in the early 1980s.[13] In 1992, D.A.Nadler is one of the first authors who first used the name of HPWS.[14] Later, due to the fierce competition, strong interests on HPWS was occured.[15]

Before the high performance work organisation strategy, quality of working life techniques (QWL) in 1960s and 1970s was dominant in organisations. There are several differences between them: QWL is a type of personnel administration technique which aims to reduce cost and labor turnover rate as well as to increase the productivity, quality and employee satisfaction; while HPWS belongs to HRM strategy that focuses on improving flexibility and quality for competition, HPWS is also centred on improving skills, decision making process, and using advanced high technologies.[16] Via the comparison, QWL had limited impact on the management function since it didn’t increase much on employee control. What’s more, only several superficial changes to the experience of work have been made which make it difficult to adapt with the ever-changing organisational management requests.[17]

Components edit 

and what are reasons for organisations to implement HPWS ? (What are the causes for having it )

HR practices edit

A high performance work system is a system that reduces costs and increases the overall performance of a company and became popular among companies in different sizes.[18]However, actual human resource strategies have been taken in various forms. In other words, different HR practices have been used in different companies according to different factors. Generally speaking, the different application of HR practice in companies which adopting high performance work system can be found classified into the following categories.


Attracting and Recruiting Staff

High performance work system tends to put emphasis on the importance of recruitment processes so that the employees can feel being valued by the company. Also, one of the most important strategies of high performance work systems is generating a high level of collective human capital and encouraging a high degree of social exchange within an organization and those are found positively related to the organization's overall performance.[19]Therefore, recruiting is an important factor which has been greatly emphasized in high performance work systems.[20]With the characteristic of high performance work systems which values individualism, in order to generate the expected employee group, different methods of recruiting can be applied to different companies adopting high performance work systems. Among which, one of the most important factor which matters is culture.[21]Apart from culture, many other factors can influence the recruiting process as well. In particular, the recruiting method can be differentiated by internal and external factors. Various ways such as the use of consultants and assessment centers are applied in high performance work systems.[22]Also, having a high performance work system can also be regarded as an important factor to attract skillful employees.[23]


Employee Training and Career Development

High performance work system involves great vertical communication between employees and managers so that the system gives an opportunity to employees becoming highly involved in business affairs.[24]Therefore, such work system requires a workforce with employees not only have necessary skills to perform their jobs, but also be able to participate and responsible for business affairs. [25]In other words, various ways of the employee training as part of Human Resource Management is very important for companies adopting high performance work system. Various studies show that employee career training and development are positively correlated with high performance work system which supports the importance for employee career development.[26]Therefore, employee training and career development as an existed important factor in Human Resource practice is emphasized overtime. Even though different methodology has been used for different companies, all organizations value the importance of such strategies.[27]Basically, the employee career development includes need analysis, training design, development, implementation and development.[28]However, to distinguish from the traditional management model, employees in high performance work system even got an opportunity to manage their own career development as high performance work system offers employees an opportunity to be highly involved in their own affairs such as reward and future development.[29]


Performance Management

Performance management is a common HR practice which measures the performance of employees and targets to have a better performance from both individual employees and the whole workforce group.[30]Basically, different companies take different performance management systems according to individual differences. Among which, Bell-Curve model which ranks employee performance by monetary figures and the balanced scorecard model which including more non-financial aspects are two methods which are widely used. What is more, various methods such as budgeting and economic value added system are also models been adopted in many companies. [31]High performance work system also adopt performance based pay model to measure the performance of employees. In addition, various research shows that such method always leads to an innovation culture.[32]


Compensation and Reward Management

High performance organizations focus on maximizing the potential of their workforce and utilizing this potential for mutual benefit and competitive advantage.[33]Thus, one of the major goals of high performance work system is to increase the percentage of engaged employees. Among all the human resources practices, reward can be regarded as one of the most important factors for organization’s performance which motivate people and enhance engagement. What is more, reward can become a major contributor of creating and maintaining a high performance culture.[34]Basically, higher wages were associated with High Performance Work Organization systems. Apart from increasing the reward of general staffs, high performance work system emphasis the increase of managers' wages as well by using various ways of compensation.[35]Also, high performance work system adopt performance related reward and recognition system.[36]Therefore, employees are more involved in their own reward management and also the organization's performance. Apart from the normal reward such as wage or bonuses, high performance work system is likely to use work/family programs t to increase the degree of employees commitment.[37]Therefore, by reaching work life balance of employees, more engaged employees are obtained which becomes a great contributor to the organization's performance.


Employee Relations

High performance managing systems are considered to be the method which generates superior organizational performance with practices such as flexible working mode, work-related reward and complete communication system. Thus strategies enhance employee discretion which improves the attitudes to work and results in a better performance of the company.[38]In order to gain more committed employees who work harder in the organization, the strategies are set to empower the employees.[39]Therefore, by influencing and aligning employees’ attitudes and behaviors with the strategic goals of the organization, the level of employee commitment is increased and subsequently organizational performance[40]Also, high performance work systems reduces the conflict between a company and labor union because of the high percentage of committed employees in the workforce and the high degree of communication between employees and organization. Therefore, the role of labor union is limited and becomes less important.[41] Even though great indicators illustrate the advantage of high performance work systems, it is applied to a limited scope of organization. In order to reach the expected goal, a deep understanding of the high performance work system is needed as the system can be very complex to apply.[42]

Implementation in different industries edit

Numerous industries utilize HPWS to improve the organisational performance and effectiveness as HPWS represent an important concept in the workplace.[43][44] According to the studies by Huselid[45] and Delaney & Huselid (1996)[46], successful implementation of HPWS may include employee motivation (e.g. compensation) and employee skills (e.g. training). Therefore, studies on industry implementation show that how HPWS effect employee’s behaviour and mental process.

Health-care industry edit

Health-care industry operates for the diagnosis and treatment of diseases, prevention of illness, and promotion of healthy living habits.[47] The leaders of health-care industry try to provide quality care, ensure safety, reduce medical costs, therefore appropriate information, advanced equipment, qualified medical skills and motivations should be given to the employees to improve the organisational performance.[48] Harmon et al.[49]and Scotti,et.al.[50] verified that there is a positive relationship between HPWS and customer satisfaction in the health-care industry, which means HPWS affects employees' view of service quality[51] for improving customer satisfaction. Employee reactions and service quality are two aspects which HPWS effect most in the health-care industry.

Employee reactions edit

In the health-care industry, organisational performance is linked closely to the customer satisfaction, and the customer satisfaction is mainly decided by the performance and attitude of the medical staff. Via using the HPWS, organisations need to give some supports to make staff to react more actively. Employee reactions include attitudes and their degree of engagement determined by how employees feel about the organisational support, policies, compensation systems, structure, work activities, and goal.[52][53] To employees, besides the care from the organisation, proper compensation and support will motivate them to be more positive and they may make better contribution to the organisational performance.[54]

Service quality edit

To increase the service quality, health-care industry needs to focus more on the quality of the medical treatment, reduction of the medical error and prevention of diseases.[55] Therefore, organisations attach importance to the employee’s skills as well as the facilities. HPWS tell the organisation to train the employees well on both theoretical knowledge as well as the practical operation. In that case, those staff can provide the customers with high quality service not only due to the good attitudes, also the excellent medical skills.

The effects of HPWS on employee attitude and service quality will do good to the customer satisfaction in health-care industry.[56]

Finance industry edit

Finance industry, as one of the knowledge-intensive service industries, needs to recruit plenty of high-quality talents to guarantee the competitive edges, so the industry is willing to spend more money on recruiting and selecting talents, which requires the HPWS to direct the industry’s operation.[57] Among all the HR practices, HPWS have the most beneficial impact on the diversity training program and incentive-based pay system. Through professional training and financial incentive, employees of the industry will have better attitude and behaviour towards their work. As a result, good employee performance will lead to outstanding organisation performance and high productivity.[58]

Computer manufacturing industry edit

Computer manufacturing industry produces a range of computer systems and peripherals and offer customers with the standard products or the customized products. HPWS helps the industry to improve the selection, training process and reward system. New employees may be unfamiliar with the HPWS, so when hiring people, organisations try hard to select appropriate person to each position. When comes to the training process, organisations cover the needed job skills as well as the attitudes and values to adapt HPWS. Companies in the industry change the conventional payment system which is inadaptable to the flexible working environment to a new one bases on a “skill matrix”.[59] This may avoid paying employees according to the title and marks, instead the system encourage staff to learn more skills since their salaries are linked with their skills. HPWS acts as a catalyst in the computer manufacturing industry to help those companies to get their goals right, get their employees right and get their operational process right.[60]

Consequences edit

Previous research on HPWS has often bundled HRM practices and labelled them HPWS practices or High Performance Practices (HPP). To discuss the impact of HPWS one must keep in mind that some studies emphasize different HRM practices when analysing their impact. [1] Generally, the impact of HPWS is dependant on the response of the employees. Only a positive response of employees can trigger a positive outcome of HPWS practices.[61] [62]Common in the literature is that HPWS practices are always a bundle of coherent and integrated HRM practices.[61] Studies mainly focus on bundles of HRM practices, without determining which practice has the most influence on superior performance.[63] Research even suggests that the effect of implementing bundles of HRM practices is greater than implementing single HRM practices.[64][65][66][63] Following impacts describe bundles of HRM practices and their outcomes.

Turnover edit

Huselid found by examining a national sample of nearly 1000 firms in the U.S. that systems of High Performance Work Practices had an signifcant effect on employee turnover. [67] High Performance Work Practices that were examined included 13 items of extensive recruitment, selection, training procedures, formal information sharing, attitude assessment, job design, grievance procedures, labour-management participation programs, performance appraisal, promotion, incentive compensation system, selection ratio, hours of training per employee per year, and promotion criteria. [67] Results show that by including these High Performance Work Practices turnover was negatively impacted by 20%.[67] A study by Guthrie has also found that turnover is decreased by incorporating High Performance Work Practices into an organisation. [68] Guthrie collected data of 164 multi-industry firms in New Zealand who used the following 13 High Performance Work Practices: internal promotions, performance- (versus seniority-)based promotions, skill-based pay, group-based (gainsharing, profit-sharing) pay, employee stock ownership, employee participatory programs,information sharing, attitude surveys, teams, cross-training or cross-utilization, training focused on future skill requirements and estimates of averge hours of annual training for employees.[68]

Productivity edit

Labour Productivity edit

A study by John Paul Mcduffie has found that labour productivity and quality can be increased by using HPWS practices. [66] Labour productivity was hereby defined as "the hours of actual working effort required to build a vehicle at a given assembly plant".[69] The study focused on 62 automotive assembly plants, all of which made use of practices that affected the organizational work systems (Work teams, Problem-Solving Groups, Employee Suggestions Made and Implemented, Job Rotation, Decentralization of Quality-Related Tasks) and HRM policies (Recruitment and Hiring, Contingent Compensation, Status Differentiation, Training of New Employees, Training of Experienced Employees).[66] The study emphasized that only interrelated HRM practices, rather than individual ones, especially if they are combined with organizational logic have a positive effect on productivity and quality.[66]

Guthrie uses sales per employee as a measure of labour productivity and finds that by using the HPWS practices of internal promotions, performance- (versus seniority-)based promotions, skill-based pay, group-based (gainsharing, profit-sharing) pay, employee stock ownership, employee participatory programs,information sharing, attitude surveys, teams, cross-training or cross-utilization, training focused on future skill requirements and estimates of averge hours of annual training for employees, are positively associated with labour productivity. [68]This study was conducted with 164 multi-industry firms in New Zealand. [68]

Firm Financial Performance edit

Huselid has found evidence for the hypothesis that HPWS influences corporate financial performance. It is in part explained due to their impact on employee turnover and productivity. However, there is still a part remaining wich is unaccounted for. [67]

Criticism edit

Godard has found that several studies which explain superior performance due to HPWS are unwarranted [70]. Godard believes effects of HPWS on employees and unions are "at best uncertain". [70] His research critizes limitations of studies that support the HPWS thesis. Limitations include the use of single items to measure teamwork, the over-representation of traditional practices not unique to the high-performance paradigm and the under-representation of work practice imtems in measures of HPWS practice adoption, inconsistencies of how HPWS practices are measured and operationalised as well as replication problems.[70]

Ramsay et al. explored linkages from HPWS practices to employee outcomes and organizational performance by utilizing data from workes in the UK and looking at 24 different HPWS practices. The study calls into question whether "positive performance outcomes from HPWS flow via positive employee outcomes".[71] They also found that HPWS practices are associtated with higher reports in job strain. [71] A dutch study found a slight positive relationship of burnout and HPWS, which is mediated by job demands. [72] The study analysed 86 dutch organisations in regards of job demands, fairness and burnout. A study conducted by Ostermann in 2000 shows findings of a positive relation between HPWS practices and layoffs as HPWS practices require less managers and less contingent workers. [73] Capelli and Neumark found that the implementation of HPWS practices are associated with raised labor costs per employee. They also found no positive relationship between the implementation of HPWS practices and labor productivity, measured in sales per employee.[74]

Another study focuses on the subjective well-being (SWB) and workplace burnout of 1488 physicians and nurses in 25 Chinese hospitals. The study points out that research on the effects of HPWS on employees has been marginalised in the past.[75] Especially research of HPWS in emerging economies is limited, which calls for more HPWS studies in non-Western contexts to generalize empirical evidence.[75]

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